In November Last Year, National Debt Increased by Over 13 Trillion Won... Despite Decreased Revenue, Expenditure Rose by 7 Trillion Won

Ministry of Economy and Finance, Fiscal Trends January 2021 Issue

Central Government Debt 826.2 Trillion Won... Up 13.4 Trillion Won from Previous Month
National Tax Revenue Down 2.1 Trillion Won · Total Expenditure Up 6.9 Trillion Won

[Sejong=Asia Economy Reporter Joo Sang-don] National debt surged by more than 13 trillion won in November last year, reaching 826 trillion won. This is because national tax revenue decreased by over 2 trillion won while expenditures increased by nearly 7 trillion won due to the execution of the 4th supplementary budget. Concerns are rising that the fiscal deterioration trend will continue for a considerable period amid the spread of the novel coronavirus infection (COVID-19).

On the 12th, the Ministry of Economy and Finance announced the 'Monthly Fiscal Trend January Issue' containing these details. According to it, as of November last year, central government debt stood at 826.2 trillion won, up 13.4 trillion won from the previous month. Compared to the previous year, it surged by 127.3 trillion won.

The integrated fiscal balance recorded a deficit of 4.3 trillion won in November. Although a surplus was recorded in October due to tax payment support effects and value-added tax payments, it returned to a deficit within a month. The managed fiscal balance, which excludes social security funds from the integrated fiscal balance to show the actual national finances, also suffered a deficit of 7.7 trillion won.

While incoming funds decreased, outgoing funds increased significantly. Total revenue in November last year (28.2 trillion won) decreased by 9 billion won compared to the same month the previous year due to declines in national tax revenue and non-tax revenue despite an increase in fund revenue. In October, total revenue increased by 8.5 trillion won as national tax revenue, non-tax revenue, and fund revenue all rose.

Specifically, national tax revenue in November was 14 trillion won, down 2.1 trillion won from the same month the previous year. Income tax was similar at 10.9 trillion won, but corporate tax decreased by 300 billion won to 5.41 trillion won due to the economic downturn caused by COVID-19. Although the highest corporate tax rate was raised by 3 percentage points to 25% two years ago, corporate tax revenue declined due to worsening corporate performance amid COVID-19. Additionally, value-added tax decreased by 800 billion won and transportation tax by 1.3 trillion won due to reduced import amounts and tax support.

On the other hand, fund revenue increased by 1.5 trillion won compared to the previous year to 12.6 trillion won in November alone, due to rises in social security contributions and current transfer income.

Expenditures increased significantly. Total expenditure in November (32.6 trillion won) rose by 6.9 trillion won compared to the same month the previous year due to the execution of the 4th supplementary budget projects and ordinary local allocation tax. The cumulative total (January to November) was 501.1 trillion won, up 57.8 trillion won from the same period last year.

Despite this fiscal deficit, the government's expansionary fiscal policy will continue this year. The government plans to spend 558 trillion won this year and issue deficit bonds worth 93 trillion won, exceeding total revenue (478 trillion won). National debt will rise to 956 trillion won, reaching 47.3% of the Gross Domestic Product (GDP). This figure does not consider the supplementary budget likely to be compiled this year.

This content was produced with the assistance of AI translation services.